Warner v Minister of Lands [2024] TOLC 7; LA 29 of 2015 (8 November 2024)

IN THE LAND COURT OF TONGA
NUKU’ALOFA REGISTRY

LA 29 of 2015

BETWEEN:
DIANNE WARNER

- Applicant

AND:
MINISTER OF LANDS

- Respondent

RULING

Before: Hon. Justice P Tupou KC
Hon. Land Assessor Faiva Tu’ifua

To: Mr S. Fonua for the Applicant
Ms ‘E. ‘Akauola for the Respondent
Mr S. Stanton as amicus curiae Lord Nuku

1. This is an application seeking directions from the Court to grant and transfer leases to the Judgment Debtor pursuant to Order 33 Rule 6(2) of the Supreme Court Rules.
   
2. On 7 September 2017, the Court of Appeal granted judgment in favour of Lord Luani (“the Judgment Creditor”) in the sum of $3,380,335.00 against Lord Nuku (“the Judgment Debtor”).
   
3. By way of enforcement, the Judgment Creditor secured a charging order over various assets of Lord Nuku made absolute on 17 July 2020. Included on the list were the 3 concerned properties, a tax allotment registered in the name of Lord Nuku consisting of an area of 8a 1r 11.1p situated on Nuku’s Land and Lease Nos. 9436 and 9473 registered in the name of Faka’osifono Finefeuiaki Valevale situated at Veitongo (“the land”).
   
4. To enforce the charging orders, Lord Luani applied for the appointment of a Receiver. On 18 February 2021, the Applicant was appointed as Receiver.
   
5. In reliance on the prescribed powers afforded to her under the Receivership Act, the Applicant prepared and signed an application for lease over Lord Nuku’s tax allotment and a transfer of the remainder of leases, 9436 and 9473 in favour of the Judgment Creditor.
   
6. Essentially, the Applicant relies on the inherent powers of the Supreme Court pursuant to section 5(2) of the Supreme Court and Order 33 Rule 6(2) of the Supreme Court Rules in bringing this request. She claims the two issues for determination is whether the Minister can grant a lease over Nuku Island without the holder’s consent and whether he can transfer the lessor’s interest in the lease to the Judgment Creditor, a third party.
   
7. She submits that sections 9 and 17 of the Interpretation Act support her position that the Minister is empowered to grant and transfer the land. Those sections read:
   
   1. Section 9 of the Interpretation Act:
      

“When in any Act, regulation or proclamation power is given to any person to do or enforce the doing of any act or thing, all such powers shall be understood to be given as are reasonably necessary to enable any person to do or enforce the doing of the act or thing.”

2. Section 17 of the Interpretation Act:
   

“Whenever by any Act a power is conferred or a duty imposed, then unless the contrary appears to be intended the power may be exercised and the duty shall be performed from time to time as occasion requires.”

8. It is suggested that a charging order creates a security interest over the land equivalent to that of a mortgage lease under Part VI of the Land Act. Therefore, it is permissible to direct the Minister to grant and transfer the land as applied for. Amended forms were provided to be endorsed by this Court.
   
9. For his part, the Respondent disregarded the application to lease and transfer the land signed by the Applicant giving rise to the present request for directions.
   
10. The Respondent opposed to the request and contends that the directions sought fall outside the scope of his duties under the Land Act. His power to grant a lease under the Act is subject to the consent of the allotment holder and Cabinet approval and his power to transfer a lease is subject to the consent of the Lessor and consultation with the Lessee.
    
11. It is denied that the Receiver had authority to sign the application to lease/transfer the land on behalf of the Judgment Debtor or to compel him to transfer the land to the Judgment Creditor.
    
12. Generally, the principle of enforcement requires a judgment or order of the court must, so far as possible, be obeyed or complied with for otherwise the authority of the court would be diminished and the legal order would suffer a breakdown.^[1] Execution is essentially a matter of procedure and is machinery which the Court can operate for the purpose of enforcing its judgments, subject to rules in force.^[2]
    
13. In recognition of the unique codified framework of the processes in the Land Act, the laws and rules in force, the Courts have been expressly cautious when dealing with the enforcement of judgments over land.
    
14. Prior to 2006, the statues of England and rules of the Supreme Court (the white book) was available when there was a gap in the laws of Tonga. As there was no current law in Tonga on the subject at the time, the UK Charging Orders Act 1979 applied.
    
15. In Intracor Trading Co. (NZ) Ltd v Finau [1990] Tonga LR, 133, the Court of Appeal held that despite the strict controls imposed by the Land Act, a charging order was not in conflict with its terms except the protection and benefits may not be as wide as in other jurisdictions. It held that the Charging Orders Act 1979 (UK) was in force in Tonga by virtue of the Civil Law Act. It opined that instead of the process provided under the Land Act, the role of the Minister would be substituted by the Court following a judgment of the Court. In terms of available remedies, it was said that the Court may restrict them to those available to mortgagees, that is, a right to occupy, sublease or sell.^[3]
    
16. In Safety at Sea (Australasian) Ltd v Tapavalu [1999] TOSC 53, it was held that if there was an intention to empower a Receiver to sell land, a specific application to be granted that power was required. It was not to be assumed from the general powers to receive the assets and moneys of the judgment debtor.
    
17. In Davisco Pineapple Industries Ltd v Vakavelo [2003] Tonga LR 34, the Court warned that vigilance must be exercised to guard against any abuse of the charging order procedure that might defeat the codified framework in which the Land Act operates.
    
18. After passage of the Civil Law (Amendment) Act^[4] limiting the application of English laws in Tonga to common law and rules of equity in force, and removing the application of statutes in force in UK, the Court in ANZ v Naufahu [2011] TOSC 2, refused an application for the sale of a lease after it was charged on the basis that a charging order was a statutory remedy and that the rules alone could not authorise exercise of a charging order, in the hope that the Plaintiff would take the question to the Court of Appeal. The matter was not appealed.
    
19. Recently, in the case of Namoa v Moehau [2024] TOCA 11, the Court of Appeal dealt with an appeal against the appointment of a receiver where the orders appointing the receiver gave the appointee powers under sections 14, 17, 18, 20 and 21 of the Receivership Act. The Court held that because the Receivership Act was not in force, the Judge was prevented from making any orders under it and set aside the order appointing the receiver. It further said:
    

“As the Act has not come into force, the issues with which we now deal are directed to the circumstances in which any application may be made under the existing law.”

20. The Court continued:
    

“In short:

1. An individual applicant for a receivership order under Order 33 should identify the reasons why no other form of enforcement order is appropriate (we refer to those enforcement actions set out in Orders 28-32 and 34-36) in order to persuade the Court that no remedy (legal or equitable) short of a receivership order is necessary to protect the interests of creditors. In cases where there is a risk of immediate dissipation of assets it may be more appropriate to seek a freezing order (under the formerly known Mareva jurisdiction) in which usual principles relating to the grant of an interim injunction (including the provision of an undertaking as to damages by the applicant creditor) will apply.
2. The assets that the creditor wishes to subject to the receivership process should be listed with specificity. They should refer only to assets of the debtor or debtors, and not to other entities (such as a company) in which they hold shares. A company is a distinct legal entity. The assets held by the debtor or debtors in that situation will be the shares in the company.

100. Because of the absence of a bankruptcy law, one ground on which a receiver could be appointed in aid of enforcement is where two or more creditors are involved and there is a need to protect the collective body of creditors rather than to encourage a rush to obtain judgment and obtain execution on a “first past the post” basis.”
     

21. Where the enforcement relates to land and is sought in the Land Court, I would respectfully extend the means of enforcement identified in Namoa to include Order 7 Rule 1 of the Land Court Rules.
    
22. I return to the instant case. Here, the orders appointing the Receiver similar to Namoa also granted her powers under sections 14, 17, 18, 20 and 21 of the Receivership Act. Clearly, the terms of her appointment under the provisions of the Receivership Act cannot stand nor can any steps already undertaken by her in exercise of those powers. The appointment was not been appealed and only the Court of Appeal may set it aside. Consequently, the balance of the terms of her appointment stands.
    
23. Her general powers under Order 33 Rule 6, to promptly pay into Court all surplus moneys received under the order and submit such accounts at such intervals as the Court may direct, remain. She may also request the Court for directions stating the matters upon which directions are required which she has done here.
    
24. Respectfully, I am not convinced that the request before me is a genuine request for directions as such; rather it is principally an application for Court orders to be issued against the Respondent to grant a lease over the Judgment Debtor’s registered tax allotment and to transfer leases 9436 and 9473 to the Judgment Creditor. To exclude the holders of the relevant land from this proceeding is unfair.
    
25. That being the case, I agree with the position of the Court in Safety at Sea (Australasia) Ltd that a specific application is required for the orders sought herein, in line with the laws currently in force. In order for all relevant issues to be resolved, all persons whose interests are likely to be affected should be joined.
    
26. The relevant authorities on the subject illuminate a surplus of issues likely to be mounted by potential litigants that should be properly pleaded and argued. It is acknowledged that powers of the court to grant a charging order over land and to appoint a receiver are provided for under the Supreme Court Act. However, in the absence of governing legislation, jurisprudence in the area will no doubt develop over time.
    
27. For the reasons discussed, the request must be refused.
    

Result

28. The request for directions is dismissed.
    
29. Costs in favour of the Respondent to be taxed if not agreed.
    

P. Tupou KC
Judge

DATED: 8 November 2024

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^[1] Refer Tonga Air Services v Fowler [1989] TLR 4, citing The Fabric of English Civil Justice, Sir Jack Jacob, p.187.
^[2] W T Lamb & Sibs v Rider [1948]2 KB 331 endorsed in Tonga Air Services above.
^[3] as in OG Sanft & Sons v Tonga Tourist & Development Co. Ltd [ 1981-1988] Tonga LR 26
^[4] Amendment Act 9 of 2003 with commencement date of 26th August 2006